Politics, Music, Sounds, and Sanity: Proud Member of the Reality-Based Community

Sunday, January 17, 2010

Smoke gets in your eyes

Shortly after the earthquake in Haiti, Haitian artist Wyclef Jean started appearing on teevee asking for donations to the usual suspects, including his own Yele Foundation. But the interwebs are buzzing with rumors his foundation is a fraud. Here's from Wikipedia (yeah, I know. If you don't like it, do your own Googling.):

In 2005, Jean established the Yéle Haiti Foundation. In its first year of operation, the foundation, with funding by Comcel, provided scholarships to 3,600 children in Gonaïves, Haiti, after the devastation by Hurricane Jeanne. In its second year of operation, it is almost doubling the amount of the scholarships and spreading them throughout Haiti, providing tuition in 5 regions. The foundation aims to provide 6,800 scholarships to children in Port-au-Prince, Gonaïves, Les Cayes, Port-de-Paix, and Cap-Haïtien.

Yéle Haiti, and its predecessor the Wyclef Jean Foundation, have been involuntarily dissolved by the the Florida Division of Corporations on multiple occasions for failing to file required state disclosure reports.[19] Of the $1,142,944 in total revenue the foundation collected in 2006, at least $410,000 was paid directly to Jean and his business partner for rent, production services, and Jean's appearance at a benefit concert.[20]

In a 2009 interview with Allhiphop.com writer Han O'Connor, Wyclef stated that his priority for the organization was to raise money to build the Yéle Center, which would be a facility that consists of a sports center, Wyclef Jean School of the Arts, a cultural center focusing on the environment and an internet café. During the interview he claimed that he feels the key to improving the situation in Haiti is to build sustainable opportunity. [21]

After the earthquake on January 12, 2010 in Haiti, Jean called on others to donate to his foundation's Yéle Haiti Earthquake Fund, imploring "We must act now."[22]

As seen on the following pages from the foundation's 2006 tax return, the group paid $31,200 in rent to Platinum Sound, a Manhattan recording studio owned by Jean and Jerry Duplessis, who, like Jean, is a foundation board member. A $31,200 rent payment was also made in 2007 to Platinum Sound. The rent, tax returns assure, "is priced below market value." The recording studio also was paid $100,000 in 2006 for the "musical performance services of Wyclef Jean at a benefit concert." That six-figure payout, the tax return noted, "was substantially less than market value." The return, of course, does not address why Jean needed to be paid to perform at his own charity's fundraiser. But the largest 2006 payout--a whopping $250,000--went to Telemax, S.A., a for-profit Haiti company in which Jean and Duplessis were said to "own a controlling interest." The money covered "pre-purchased...TV airtime and production services" that were part of the foundation's "outreach efforts" in Haiti.

OK then. I have no insider knowledge of Wyclef or Yele, but I do know the entertainment business, so I think I can shed some light on this.

Regarding the rent paid to the studio, it may be for one of several reasons, like legitimate office rent. The foundation needs space, and will have to pay rent, why not in your own building. Nothing sinister here. And don't think a legitimate business like Platinum Sound can offer "free" space in its building to a charity. Ask your accountant about that. Not happening.

$100k to the studio for Wyclef's performance at a benefit? Look, if he is the studio's only client, like Stevie Wonder and his Wonderland Studio when I worked there, he still has to pay staff, building rent, utilities, even when he's not there. While I wish he'd just paid his expenses out of his own nicely-lined pocket, it still fails the smell test to me. Nothing to see here, move along.

And paying $250k to a production company you own for work they do? In terms of production and post-production expenses, that amount is so small as to be laughable. It probably is wages, utilities, equipment rentals, and rent for the time the company was working on the project. Again, I wish he had just swallowed the expenses, but again, he has a business, with, you know, employees, etc.

Look, when you watch something like the Jerry Lewis telethon, there are many people working on that show, and most of them need to get paid. Someone making $15 per hour can't afford to donate their time for a week of technical work. Could you? Of course not.

So is Wyclef guilty of sloppy bookkeeping? Yes.

Is he guilty of not covering some expenses? Yes.

But is he guilty of fraud, as The Smoking Gun and many others are now implying? I don't know.

But the numbers don't add up to me. If he is skimming a few thousand here, $250k there, he's a lousy con artist, when there's far greater $$ to be had.